New Alabama Power CEO stressing continuity

In this Feb. 13, 2014, Mark Crosswhite, new Alabama Power Company CEO, talks about the company in Montgomery, Ala. "Our interests are focused on providing reliable, affordable electric service to our customers. That's always at the top," said Crosswhite. (AP Photo/The Montgomery Advertiser, Lloyd Gallman)

AP

Bryan LymanThe Montgomery Advertiser

Published: Wednesday, February 19, 2014 at 4:00 p.m.

Last Modified: Wednesday, February 19, 2014 at 4:58 p.m.

MONTGOMERY (AP) — Mark Crosswhite doesn't like the word "initiative," saying it too often brings up ideas he calls "flash in the pan." Instead, the new Alabama Power Co. CEO wants to stress continuity.

"I would say things are probably not going to change drastically for a long time," Crosswhite said late last week, a few days after being named CEO of the state's largest private utility. "Our interests are focused on providing reliable, affordable electric service to our customers. That's always at the top."

And Crosswhite said that means market conditions will continue to determine the company's energy portfolio — once heavily reliant on coal, today somewhat less so. It also means the utility will continue to push for economic development and keep an eye on regulations aimed at cutting the nation's carbon emissions, a key contributor to climate change.

Crosswhite, 51, has been with Southern Company since 2004, and has previously served as chief operating officer for Southern Company, Alabama Power's parent company. Prior to joining Southern Company, Crosswhite worked in the energy division of Birmingham's Balch and Bingham law firm for 17 years.

He will succeed Charles McCrary, who will retire on May 1 after 12 years as the head of the company.

Crosswhite steps into the position a few months after Alabama Power and other utilities were wrapped up in an attempt to have a formal rate review. PSC commissioner Terry Dunn and a number of groups, including Alabama Arise and AARP, had pushed for reviews of the rates charged by the utility, as well as those charged by Alagasco and Mobile Gas.

The utility has not seen such a review since 1983, and commission president Twinkle Andress Cavanaugh and commissioner Jeremy Oden ultimately voted against the proposal. Cavanaugh has claimed "environmental extremists" would hijack such a process.

The PSC ultimately voted to use a new measurement formula for Alabama Power's return on common equity, which takes into account the utility's debt structure. Cavanaugh and Oden said the change would ultimately save money over the long haul, but critics argued it would only make it difficult to compare the utility's rates with other states.

Crosswhite said he watched the proceedings from afar, but did not think the utility's cost of capital "was in any way unjustified."

"Obviously, the Public Service Commission is the company's regulator, and it's their prerogative to have investigations when they think they're appropriate," he said. "It did not appear to me that the proceeding was necessary. But the commission had the proceeding. I think it came to a fair conclusion."

According to the U.S. Energy Information Agency, in November Alabama's average retail price of electricity to the residential sector was 10.75 cents per kilowatt hour, lower than the national average of 12.09 cents kw/hr and slightly higher than the East South regional average of 10.31 cents per kw/hr.

Industrial customers paid an average of 5.65 cents kw/h that month, the lowest in the East South region. Low industrial electricity rates have been cited as a factor in drawing customers to Alabama, and Crosswhite said economic development would continue to be a priority for the utility.

"A lot of us have kids in their teen years or their early 20s, and they're trying to decide where to settle," he said. "We want them to be here. We know that means they're going to have to have careers they can have in the state."

The company does not plan to build any new power plants until 2030 at the earliest, but Crosswhite said the company will try to keep up with regulations from Washington, in particular those related to carbon, a by-product of coal burning.

Last month, the Environmental Protection Agency proposed a rule limiting coal plants to 1,100 pounds of carbon dioxide per megawatt hour, less than what the average coal plant current emits. Crosswhite said the utility had spent $3 billion over the past 10 years complying with regulations; the company reported operating revenues of $5.5 billion in 2012.

"It's a challenge because the bar is never static," he said. "The rule is set. We satisfy that rule, then another rule is set on top of it. It makes future planning very difficult when the rules are evolving."

The utility has moved away from coal in recent years. Southern Company actually burned more natural gas than coal in 2012 and 2013. Crosswhite called those market-based decisions, aimed at trying to keep prices down for consumers. The recent cold snap throughout the country, he said, has raised the price of natural gas and made coal more attractive.

"We do believe very strongly that the answer for us is to have a very diverse fuel mix," he said. "When the price of natural gas goes down, we can burn natural gas and take advantage of those prices. When natural gas prices go up, we can have the coal fleet run."

Crosswhite said the utility was "exploring renewables to see where it makes economic sense for our customers."

<p>MONTGOMERY (AP) — Mark Crosswhite doesn't like the word "initiative," saying it too often brings up ideas he calls "flash in the pan." Instead, the new Alabama Power Co. CEO wants to stress continuity.</p><p>"I would say things are probably not going to change drastically for a long time," Crosswhite said late last week, a few days after being named CEO of the state's largest private utility. "Our interests are focused on providing reliable, affordable electric service to our customers. That's always at the top."</p><p>And Crosswhite said that means market conditions will continue to determine the company's energy portfolio — once heavily reliant on coal, today somewhat less so. It also means the utility will continue to push for economic development and keep an eye on regulations aimed at cutting the nation's carbon emissions, a key contributor to climate change.</p><p>Crosswhite, 51, has been with Southern Company since 2004, and has previously served as chief operating officer for Southern Company, Alabama Power's parent company. Prior to joining Southern Company, Crosswhite worked in the energy division of Birmingham's Balch and Bingham law firm for 17 years.</p><p>He will succeed Charles McCrary, who will retire on May 1 after 12 years as the head of the company.</p><p>Crosswhite steps into the position a few months after Alabama Power and other utilities were wrapped up in an attempt to have a formal rate review. PSC commissioner Terry Dunn and a number of groups, including Alabama Arise and AARP, had pushed for reviews of the rates charged by the utility, as well as those charged by Alagasco and Mobile Gas.</p><p>The utility has not seen such a review since 1983, and commission president Twinkle Andress Cavanaugh and commissioner Jeremy Oden ultimately voted against the proposal. Cavanaugh has claimed "environmental extremists" would hijack such a process.</p><p>The PSC ultimately voted to use a new measurement formula for Alabama Power's return on common equity, which takes into account the utility's debt structure. Cavanaugh and Oden said the change would ultimately save money over the long haul, but critics argued it would only make it difficult to compare the utility's rates with other states.</p><p>Crosswhite said he watched the proceedings from afar, but did not think the utility's cost of capital "was in any way unjustified."</p><p>"Obviously, the Public Service Commission is the company's regulator, and it's their prerogative to have investigations when they think they're appropriate," he said. "It did not appear to me that the proceeding was necessary. But the commission had the proceeding. I think it came to a fair conclusion."</p><p>According to the U.S. Energy Information Agency, in November Alabama's average retail price of electricity to the residential sector was 10.75 cents per kilowatt hour, lower than the national average of 12.09 cents kw/hr and slightly higher than the East South regional average of 10.31 cents per kw/hr.</p><p>Industrial customers paid an average of 5.65 cents kw/h that month, the lowest in the East South region. Low industrial electricity rates have been cited as a factor in drawing customers to Alabama, and Crosswhite said economic development would continue to be a priority for the utility.</p><p>"A lot of us have kids in their teen years or their early 20s, and they're trying to decide where to settle," he said. "We want them to be here. We know that means they're going to have to have careers they can have in the state."</p><p>The company does not plan to build any new power plants until 2030 at the earliest, but Crosswhite said the company will try to keep up with regulations from Washington, in particular those related to carbon, a by-product of coal burning.</p><p>Last month, the Environmental Protection Agency proposed a rule limiting coal plants to 1,100 pounds of carbon dioxide per megawatt hour, less than what the average coal plant current emits. Crosswhite said the utility had spent $3 billion over the past 10 years complying with regulations; the company reported operating revenues of $5.5 billion in 2012.</p><p>"It's a challenge because the bar is never static," he said. "The rule is set. We satisfy that rule, then another rule is set on top of it. It makes future planning very difficult when the rules are evolving."</p><p>The utility has moved away from coal in recent years. Southern Company actually burned more natural gas than coal in 2012 and 2013. Crosswhite called those market-based decisions, aimed at trying to keep prices down for consumers. The recent cold snap throughout the country, he said, has raised the price of natural gas and made coal more attractive.</p><p>"We do believe very strongly that the answer for us is to have a very diverse fuel mix," he said. "When the price of natural gas goes down, we can burn natural gas and take advantage of those prices. When natural gas prices go up, we can have the coal fleet run."</p><p>Crosswhite said the utility was "exploring renewables to see where it makes economic sense for our customers."</p>